After several years monitoring the OECD’s progress in relation to the digitalisation of the economy and in particular the development of Pillar Two, a book has been published containing the analysis championed by the Tax and Competitiveness Foundation.
The book, entitled “Global Minimum Taxation: Notes for application, assessment of the impact on the domestic and international tax system”, seeks to simultaneously provide a practical overview to help business groups subject to this new scheme fulfil formal and material obligations and present the authors’ assessment of this innovative tax regulation.
The purpose of subjecting multinationals to minimum taxation has been developed within the OECD Inclusive Framework for subsequent mandatory application within the European Union through Directive 2022/2523, the transposition of which has finally been completed in Spain under Law 7/2024.
The sponsored solution involves complex regulations, entailing a very cumbersome formal burden whenever a business group exceeds the basic turnover threshold stipulated in the regulation. This means a complex verification procedure, even if the group is ultimately not required to file the relevant tax return or pay the tax. An additional aspect of this complexity is the reference made in both the Directive and the Spanish transposition law to the guidelines, comments and other developments issued by the OECD when interpreting the various aspects of the new scheme. This triggers worrying uncertainty and variability as regards the rules to be applied and, of course, a novel solution through the “formal deregulation” of the scheme governing this new tax measure.
Furthermore, the “overall” purpose pursued by the new approach brings in solutions that raise doubts about a possible conflict with the traditional principles of international taxation and even (from a European Union perspective) with the fundamental freedoms and principles governing human rights.
Finally, it should be noted that the European Directive has been clearly rejected by several countries, and with particular vigour by the Trump administration in the United States.
In short, there are a number of conflicting aspects of the new regulation that must be analysed in detail, as this is a new tax measure that will be mandatory for multinationals and large business groups established in the European Union. This analysis is also necessary because the novelty of this solution and, in general, the course of action taken by the European Union in recent years in the field of taxation, require careful consideration of compatibility with the guiding principles of existing tax systems and, more importantly, with the competitiveness of the EU Member States. The book published by the Foundation provides interesting insights into these matters and we aim to disseminate them in an appropriate manner when this work is presented in the coming months.